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Thanks for the new car

July 25, 2006

Avis and Budget have apparently figured out how to pay for their fleet upgrades. They’re going to send you the bill.

On Aug. 1, the car rental companies (both owned by the same parent company) are updating their terms and conditions for frequent renters. Most of the changes are routine, but at least one paragraph has jumped out at several customers. It addresses what happens in the event a vehicle is damaged.

“If we decide to sell the car rather than repair it, in most states you will be responsible for the difference between the car’s retail fair market value and price of resale,” the company says in e-mails sent to its frequent renters.

Here are the new Avis terms and here are the new Budget terms. Scroll down to paragraph 11 for the full language.

The way I read this is that if you damage a car even slightly — say, a ding or a dent — Avis and Budget could theoretically sell the car and charge you the difference between the car’s “fair market value” and price of resale.

Of course, car rental companies buy their cars at a big discount — so you would effectively be subsidizing the cost of upgrading the rental company’s fleet. At least that’s how some Avis and Budget customers who have contacted me see it.

Hertz recently changed its terms and conditions, too, and customers were equally unimpressed. The more I read these new contracts, the more convinced I am that if something does go wrong with a rental, you need to hire yourself a really good lawyer.

You’re gonna need one.

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

5 comments

  • Marcy Schackne

    Regarding the new Avis/Budget contracts … the answer is quite simple. In two words: Diners Club. While the Diners Club card (now with a MasterCard affiliation) may have a $90 annual fee, if you are a frequent car renter, the card serves as PRIMARY auto insurance – starting from the first dollar. You don’t have to use your own deductible, just contact the card services team and you’re all set.

  • Kevin Morgan

    I’m not so sure that’s the case, Marcy. If Avis or Budget decides not to repair the car, I doubt Diners Club would consider this separate and different charge an “insurance claim” as it’s normally understood.

    As I understand what’s being presented: I rent a car from Avis that’s worth, say, $12,000 at fair market value. I have an accident that causes, say, $800 worth of damages. Avis decides it’s not worth it to repair the car, and decides to sell it. Because of the damage, the car sells at a discount from its fair market value more than the repair cost– let’s say $10,000.

    Avis is saying they could charge me an extra $2,000 to make up the difference. Diner’s Club *might* pay the $800 cost of repair, but they’re not going to give Avis an extra $1,200 over and above that.

    At least, I think that’s what Chris is suggesting might happen. Right?

  • Philip kaufman

    Be very careful when using Diners Club. Two years ago I almost got burned . After using it & reccomending it to many others for 10 years, I had a small accident. I then found out that while they may be primary, they don’t cover all costs. Such as administratuin fees, “dimunization” of auto etc. Out of a total of $4,500.00 I was to be liable for about half the amount Which inthe end I managed to work out with them after considerable “back & forth”. So much for PRIMARY. RENTER BEWARE!!

    p.s. And they did away with their 60 day billing cycle when they were bought by Mastercard….

  • W Hope

    One other glaring opp for the rental co’s to profit at renters’ expense lies in the fact that they can choose to sell at a lowwwwwww price just to move the merchandise; after all, they’re gonna get the rest out of you. So if cousin Vinnie needs a new ride but gots no money, you can sweeten the deal out of the goodness of your heart.

  • Randy M

    As an insurance professional for the past 15 years, this doesn’t surprise me. The rental companies have tried many different tactics to pass on costs to the customer (and their insurance carriers). Diners Club or your own personal auto policy may cover rental cars with no deductible, the problem is in the policy language. Insurance is designed (as it should be) to cover the cost of the repairs or if the car is a total loss the actual cash value of the car, not an arbitrary and inflated loss from a company who is in the car business. I’d bet even Diner’s Club won’t be covering the total amount being claimed by the rental company.

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